Asia’s #MeToo moment is exception that proves rule 1 Feb 2018 Sexual misconduct allegations against U.S. mogul Steve Wynn led to a selloff of shares in his Macau casino unit. Boardroom gender inequality suggest Asia is ripe for its own scandals. But cultural norms and lack of basic freedoms make that a more distant risk for investors.
China’s IPO cleanup makes encouraging debut 1 Feb 2018 Beijing regulators just rejected six new-listing applications in a single day, including one from Hong Kong-traded psychiatric hospital chain Wenzhou Kangning. Enforcing tougher standards could lead to broader reforms. The risk is empowering entrenched bureaucrats even more.
Zuckerberg’s persistent warnings bear heeding 31 Jan 2018 The Facebook founder has been flagging an ad slowdown for months. Tweaks designed to make the $540 bln social network less divisive may exacerbate that, by hindering engagement and stifling user growth. Facebook has rarely disappointed investors; this could be the year.
Bond market tightening complicates Powell’s task 31 Jan 2018 U.S. Treasury yields rose to near four-year highs even as the Fed left policy unchanged at Janet Yellen’s last meeting. A fresh growth spurt and worsening deficit outlook pose challenges for successor Jerome Powell. Hiking in a rising-rate environment is riskier for the economy.
Old-media stalwart tries out new business model 31 Jan 2018 Thomson Reuters’ $20 bln deal to cede control of its Financial & Risk unit to Blackstone includes a 30-year commitment to help fund the news division. That gives Reuters protection in a competitive industry, assuming its now highly leveraged biggest client prospers.
NXP has Qualcomm over a barrel 31 Jan 2018 The larger chipmaker’s stock is close to Broadcom’s $105 bln hostile offer price. It might be because investors are warming to Qualcomm’s stand-alone worth. But that vision fades unless Qualcomm closes its own $38 bln deal for NXP. The danger now is raising its bid too much.
Hadas: Tesla’s $60 billion mistake on pay 31 Jan 2018 The loss-making electric-car maker could hand founding genius Elon Musk that much if all goes miraculously well. The hero-worship approach to compensation made some sense when Tesla was more concept than manufacturer. What it needs now is more boring and bureaucratic competence.
Walmart weighs online weapon in India’s retail war 31 Jan 2018 The U.S. grocer may buy up to 20 pct of Flipkart, Amazon's arch-enemy in India. The e-commerce firm, valued at some $12 bln, would secure a marquee backer ahead of a possible New York IPO. Walmart, which has struggled to open stores, would jump-start access to local consumers.
Copier companies spit out an M&A original 31 Jan 2018 Fujifilm is taking control of $8 bln Xerox, whose storied brand became a verb. The premium being paid hinges on some financial engineering of a 56-year-old joint venture. It’s an odd deal, but one that should deliver savings without straining the Japanese company's balance sheet.
Capita’s kitchen sink still leaves dirty linen 31 Jan 2018 The UK outsourcing group’s shares slumped 40 pct after its new CEO flagged a 700 mln pound rights issue, asset sales and scrapped its dividend. They should plug balance sheet holes. To recover Capita will need investment, and show how it differs from recently collapsed Carillion.
Santander’s Brazilian samba drowns out UK blues 31 Jan 2018 A rebound in the Spanish bank’s largest market by profit offset rising UK bad debts, enabling an annual 11.8 percent return on underlying tangible equity. This year should see a stronger Brazil and fewer one-offs. That should mean Santander’s returns stay ahead of European peers.
Ericsson merits a dysfunctionality discount 31 Jan 2018 The Swedish telecoms-kit maker reported an operating loss for the fifth consecutive quarter and sales fell 10 percent in 2017. Boss Borje Ekholm promises an improvement this year but the core mobile market is shrinking. A valuation premium to Nordic peer Nokia is hard to justify.
H&M’s unfashionable stock demands total revamp 31 Jan 2018 The retailer’s operating profit fell by a third in the fourth quarter and operating margin has more than halved in a decade. Its valuation has fallen toward that of dowdier peers. Stopping the rot will at the least require an aggressive online strategy and more store closures.
Consoles power up Nintendo like nothing else 31 Jan 2018 A near four-fold leap in quarterly operating profit to $1.1 bln accentuates the popularity of the recently launched Switch. Some lean years fed angst about apps and IP. Like the iPhone's significance to Apple, though, what really matters to Nintendo is getting the device right.
Chinese hotelier delivers unexpected wakeup call 31 Jan 2018 Using a JV with TPG, China Lodging is buying two Beijing properties. It's a departure from the scary-sounding and lucrative "manachised" model. Managing and franchising – but not owning – hotels has generated big returns. The $200 mln deal led to $500 mln of lost market value.
Trump policy agenda starts to stick to the script 30 Jan 2018 The U.S. president’s first State of the Union address praised fast growth and recent tax cuts. He talked immigration and promised $1.5 trln for infrastructure, but the speech contained few surprises. A consistent platform is starting to emerge from the noise.
Samsung stock split is an illusory value boost 31 Jan 2018 A plan to split its stock 50-fold, unveiled alongside detailed results, helped push the tech giant’s shares up sharply. That is puzzling: this won’t do much except entice a few more small investors. Issues like shareholder returns and corporate restructuring matter far more.
Mega-deals could be prisoners in China trade war 31 Jan 2018 It has been years since Beijing trustbusters vetoed a merger of two foreign companies. The restraint may be tested if Donald Trump follows through on his anti-China bluster. ADM, Bain and Qualcomm are potential captives, especially since chips and grain are sensitive sectors.
Blackstone could double its money betting on data 30 Jan 2018 The buyout firm is taking control of Thomson Reuters’ financial unit in a $20 bln deal. With a shade more efficiency and some acquisition-led growth, Blackstone could generate a generous return. The risk comes from adding financial leverage to a cyclical, competitive industry.
MetLife pension gaffe leaves CEO on thin ice 30 Jan 2018 Steve Kandarian’s big coup was getting the $725 bln insurer knocked off the list of systemic institutions. But MetLife’s failure to pay benefits to 30,000 retirees overshadows that achievement. After poor returns and a disappointing spinoff, it looks like his time is up.
Dr Pepper settles too readily on drinking partner 30 Jan 2018 The $21 bln beverage group’s deal to sell itself to coffee maker Keurig leaves shareholders some 25 pct richer. It’s not the greatest brand. But based on savings achieved in other mergers, Dr Pepper should be able to extract more. Either rivals lack ambition or the company does.
Holding: Mickey Mouse is due trip out of copyright 30 Jan 2018 The valuable rodent will follow other creations into the public domain if Congress allows 95 years of legal protection to expire after 2018. Disney would squeak, but artists, internet users and, yes, Google should cheer. Another extension would leave lawmakers looking like rats.
Sberbank’s homeward pivot is a no-brainer 30 Jan 2018 The Russian bank is in talks to offload its majority stake in Denizbank. Sanctions had already taken the shine off Sberbank’s expansion abroad. But selling the Turkish lender at its $3.2 bln book value would bolster capital and help it become even more dominant in Russia.
U.S. healthcare bloat faces new triple threat 30 Jan 2018 Amazon, Berkshire Hathaway and JPMorgan are getting together to cut medical costs. Details are few and obstacles many, but they bring relevant skills and a lot of employees to the mix. A multibillion-dollar hit to health-sector stocks shows the shakiness of the status quo.
Thomson Reuters deal puts financial over risk 30 Jan 2018 The Canadian group is in talks to sell 55 pct of its data and analytics business to Blackstone at a $20 bln valuation, including debt. That implies a market discount for the remaining legal and tax arms. Carving up the company may end a run of lagging peers’ stock performance.
Philips still waiting for valuation health-check 30 Jan 2018 The Dutch group has shed its consumer electronics legacy and now earns almost all its income from health technology. Low profitability means CEO Frans van Houten has yet to be rewarded with a valuation worthy of the sector. Full-year results for 2017 at least show he’s on track.
Brexit leak nudges UK towards softer withdrawal 30 Jan 2018 State papers reportedly show the country will lose in every scenario after it leaves the EU. That will inflame tensions within the Conservative Party and government. Sadly for anti-Brexiteers, the upshot is more likely a less abrupt schism than a scrapping of the entire process.
New-look Noble Group has a fighting chance 30 Jan 2018 A tentative deal with creditors would halve the Hong Kong commodity trader’s $3.4 bln of senior debt and give them 70 pct of the company. With a healthier capital structure, and fat incentive packages in place, it’s up to management to put years of dismal performance behind them.
Chinese angels keep Wanda’s IPO dream alive 30 Jan 2018 A Tencent-led group will pay $5 bln for a stake in the indebted conglomerate's property arm. The money buys boss Wang Jianlin precious time to execute a relisting in Shanghai. This new alliance could help clear regulatory hurdles too. What the allies get out of it is less clear.
Chinese tech is missing a download from investors 30 Jan 2018 Baidu, JD and other U.S.-listed firms routinely skip annual general meetings, taking advantage of a lenient setup for companies legally based in the Caymans. Depriving shareholders of this standard way to raise concerns with bosses and vote on directors is a serious red flag.